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Banking Sector (banking + sector)
Selected AbstractsDJIBOUTI: Booming Banking SectorAFRICA RESEARCH BULLETIN: ECONOMIC, FINANCIAL AND TECHNICAL SERIES, Issue 11 2009Article first published online: 23 DEC 200 No abstract is available for this article. [source] The Regulatory State and Turkish Banking Reforms in the Age of Post-Washington ConsensusDEVELOPMENT AND CHANGE, Issue 1 2010Caner Bakir ABSTRACT The new era of the Post-Washington Consensus (PWC), promoted under the auspices of International Financial Institutions such as the International Monetary Fund and the World Bank, centres on the need to develop sound financial regulation and strong regulatory institutions, especially in the realm of banking and finance in post-financial crisis developing countries. This article uses an examination of the Turkish banking sector experience with the PWC in the aftermath of the 2001 financial crisis to show its considerable strengths and weaknesses. The authors argue that the emergent regulatory state in the bank-based financial system has a narrow focus on strengthening prudential regulation, whilst ignoring the increased ,financialization' of the Turkish economy. They identify the positive features of the new era of the PWC in terms of prudential regulation, which has become much more robust in its ability to withstand external shocks. At the same time, however, the article highlights some of the limitations of the new era which resemble the limitations of the PWC. These include the distributional impact of the regulatory reforms within the banking sector, and notably the emergence of foreign banks as the major beneficiaries of this process; weaknesses in promoting productive bank intermediation that finance the real economy and economic growth, leading to poverty reduction via growth of employment whilst stimulating financialization within the economy; and finally, the exclusive focus on prudential regulation, whilst ignoring regulatory costs, consumer protection and competition regulation. [source] ,Milking The Elephant': Financial Markets as Real Markets in KenyaDEVELOPMENT AND CHANGE, Issue 2 2004Susan Johnson Financial liberalization policies in the 1990s were intended to raise formal sector interest rates, enhance competition and expand access for users. This article investigates patterns of provision and use in a local financial market in Karatina, Kenya, at the end of the 1990s after a period of financial and economic liberalization. It takes a holistic approach, examining both formal and informal financial arrangements and microfinance interventions. This is because the role of the informal financial sector is particularly important for poor people and has received relatively little attention in the discussion of the consequences of reform. The author does this using a ,real' markets approach that sees markets as socially regulated and structured. Significant provision by the mutual sector (formal and informal), and poor lending performance by the banking sector is explained through an examination of the characteristics of the services on offer and their embeddedness in social relations, culture and politics. [source] Prudential Regulation of Banks in Less Developed EconomiesDEVELOPMENT POLICY REVIEW, Issue 3 2002S. Mansoob Murshed This article argues that developing countries face inherent obstacles in setting up efficient financial regulation, and building up a sound banking sector: the presence of multiple tasks and multiple principals, poor institutions, lack of economies of scale in the banking sector as well as regulatory supervision, and the lack of reputation. Developing countries need a regulatory framework that rewards prudent risk-taking, but punishes misconduct. This is likely to involve a combination of input-based measures impacting on bankers' incentives, with a few direct controls on the output of the sector. The article concludes with a list of policy options whose appropriateness is judged by their ,friendliness' with local circumstances. [source] The Choice Among Interbank Settlement Systems: The European ExperienceECONOMIC NOTES, Issue 1 2003Angelo Baglioni This paper addresses the choice of banks between alternative channels for interbank payments. The conventional view assumes a tradeoff between the safety of real-time gross settlement (RTGS) and the liquidity savings of multilateral netting. Moreover, correspondent banking is believed to be inefficient, both in terms of liquidity and of administrative costs. In the last decade, however, the impulse of the Committee on Payment and Settlement Systems, technological changes and the management of RTGS systems by central banks have reduced the difference between the various systems. This is especially true for risk, whereas liquidity cost crucially depends on the refinancing policy adopted by the central bank and the co-ordination among the participants. On the basis of the recent evolution of payment systems in Europe, we verify the importance of liquidity, as well as other variables like transaction costs, for the choice of banks among different settlement systems. Cost factors imply that the nature of payments flows (value, commercial versus financial) and some structural features of the banking systems (dimension of the intermediaries, concentration of the banking sector) become important. The analysis is carried out both through a theoretical model and a cross-country comparison based on three data sources: ECB (European Central Bank, EBA (Euro Banking Association) and SWIFT (Society for Worldwide Interbank Financial Telecommunication). [source] Competition Among Banks, Capital Requirements and International SpilloversECONOMIC NOTES, Issue 3 2001Viral V. Acharya The design of prudential bank capital requirements interacts with the industrial organization of the banking sector, in particular, with the level of competition among banks. Increased competition leads to excessive risk-taking by banks which may have to be counteracted by tighter capital requirements. When capital requirements are internationally uniform but the levels of competition among banks in different countries are not, international spillovers arise on financial integration of these countries. This result begs a more careful analysis of the effect of financial liberalization on the stability of banking sectors in emerging countries. It also calls into question the merits of employing uniform capital requirements across countries that diverge in the industrial organization of their banking sectors. (J.E.L.: G21, G28, G38, F36, E58, D62) [source] Will Basel II Lead to a Specialization of Unsophisticated Banks on High-Risk Borrowers?,INTERNATIONAL FINANCE, Issue 1 2005Bertrand Rime The stability of the banking sector is an essential precondition for a well-functioning economy. Enhancing this stability was one of the main motivations for the elaboration of the new capital adequacy framework, Basel II. The present paper examines the impact of Basel II on risk allocation in the banking sector and its implications for bank capital adequacy. Basel II introduces a two-layer framework for the calculation of the capital requirement for credit risk: (i) a very risk-sensitive internal ratings-based (IRB) approach that will be used by large sophisticated banks and (ii) a standardized approach, much less risk sensitive, which will be used by smaller, less sophisticated banks. We show that because the two bank types compete in the loan market, Basel II may induce sophisticated banks to specialize on low-risk borrowers and unsophisticated banks to specialize on high-risk borrowers. As a consequence, we may face a trade-off between the capital adequacy of the two types of banks, with an ambiguous net effect on financial stability: the risk sensitivity of the IRB approach improves the capital adequacy of sophisticated banks, but it deteriorates the capital adequacy of unsophisticated banks, as their increased risk taking is not appropriately reflected by the standardized capital requirement. [source] Lessons from the Russian Meltdown: The Economics of Soft Legal ConstraintsINTERNATIONAL FINANCE, Issue 3 2002Enrico Perotti On 17 August 1998, Russia abandoned its exchange rate regime, defaulted on its domestic public debt and declared a moratorium on all private foreign liabilities, which was equivalent to an outright default. The depth and speed of the Russian meltdown shocked the international markets, and precipitated a period of serious financial instability. Important lessons on issues of bank supervision and international stability can be learned by understanding the roots of such a crisis. The visible reason of the crisis was an unsustainable fiscal deficit coupled with massive capital flight, but what were their underlying causes? We argue that the structure of individual incentives in a context of capture of state decisions by special interests, compounded by a rouble overvaluation driven by exceptional international support, helps to explain the build,up of non,payment, theft and capital flight that led to the crisis. We offer an explicit model of rational collective non,compliance, cash stripping and rational collective non,payment which led to the fiscal and banking crisis and, ultimately, to a complete meltdown. In our view, the banking sector was already insolvent prior to the crisis, and contributed directly and indirectly to it. We conclude with a radical policy proposal for a stable banking system for Russia, appropriate for its current capacity for legal and supervisory enforcement. It is based on a segmented, narrow banking sector, concentration in commercial banking and a cautious extension of deposit insurance. [source] Dimensions of financial integration in Greater China: money markets, banks and policy effectsINTERNATIONAL JOURNAL OF FINANCE & ECONOMICS, Issue 2 2005Yin-Wong Cheung Abstract The financial linkages between the People's Republic of China (hereafter ,China') and the other Greater China economies of Hong Kong and Taiwan are assessed, and compared against those of China with Singapore, Japan and the United States. For both sets of links, there is evidence that ex post uncovered interest parity tends to hold over longer periods, and the magnitude of the parity deviations is shrinking over time. The deviations depend upon the extent of capital controls, and in certain cases, exchange rate volatility. However, while the money markets of China are increasingly linked to money markets in the rest of the world, our empirical results suggest that the banking sector,the main source of capital for Chinese firms,remains insulated. Copyright © 2005 John Wiley & Sons, Ltd. [source] Contagion in banking due to BCCI's failure: evidence from national equity indicesINTERNATIONAL JOURNAL OF FINANCE & ECONOMICS, Issue 3 2004Angelos Kanas Abstract We examine whether the failure of the multinational banking group BCCI caused contagion effects in the banking sectors of four countries where BCCI had established operations, namely the UK, the US, Spain and Switzerland. We find evidence of contagion effects in the UK and Spain which appear to have registered several months before the eventual closure announcement. There is no evidence of contagion effects in the US and Switzerland. Our results have implications for the stability of the European banking sector, as banks licensed anywhere in the EU will be able to set up branches in other EU countries without needing to obtain further authorization. Copyright © 2004 John Wiley & Sons, Ltd. [source] Credit Default Swaps and the Stability of the Banking Sector,INTERNATIONAL REVIEW OF FINANCE, Issue 1 2010FRANK HEYDE ABSTRACT This paper considers credit default swaps (CDSs) used for the transfer of credit risk within the banking sector. The banks' motive to conclude these CDS contracts is to improve the diversification of their credit risk. It is shown that these CDSs reduce the stability of the banking sector in a recession. However, during a boom or in periods of moderate economic up- or downturn, they may reduce this stability. The main reasons behind these negative impacts are firstly, that banks are induced to increase their investment in an illiquid, risky credit portfolio, and secondly, that these CDSs may create a possible channel of contagion. [source] The impact of the Asian financial crisis on bank efficiency: The 1997 experience of Malaysia and ThailandJOURNAL OF INTERNATIONAL DEVELOPMENT, Issue 7 2010Fadzlan Sufian Abstract In the mid-1990s, the East Asian countries experienced severe financial crisis that were followed by deep economic downturns. A variety of methodologies have been used to understand the nature of the Asian financial crisis. However, the impact of the 1997 Asian financial crisis on the efficiency of the financial industry has yet to be studied. By employing the Data Envelopment Analysis (DEA) approach the present study attempts to examine for the first time the impact of the 1997 Asian financial crisis on the efficiency of the Malaysian and Thailand banking sectors, two of the East Asian countries that were severely affected by the crisis. The study focuses on three major approaches vis., intermediation, value added and operating approaches. The results clearly bring forth the high degree of inefficiency in the Malaysian and Thailand banking sectors, particularly a year after the crisis. We find that the Malaysian banking sector has exhibited a higher TE levels during the post crisis period under the intermediation and value added approaches, while TE seems to be lower under the operating approach. The empirical findings suggest that the Thailand banking sector has exhibited a lower TE level during the post crisis period under all approaches. Copyright © 2009 John Wiley & Sons, Ltd. [source] Critical success factors of business process re-engineering in the banking industryKNOWLEDGE AND PROCESS MANAGEMENT: THE JOURNAL OF CORPORATE TRANSFORMATION, Issue 4 2008T. C. E. Cheng This study seeks to identify the factors that are critical to successful implementation of business process re-engineering (BPR), and attempts to develop a reliable, empirically tested and rigorously validated measurement instrument for BPR, for Hong Kong's banking sector. We conducted a large-scale survey of banking industry executives and applied a rigorous research methodology to treat the survey data. We identified four critical success factors (CSFs) of BPR implementation, which are management commitment, customer focus, use of IT and communication of change and developed a functional instrument to measure BPR in the banking industry. Of these four factors, only customer focus has a significant relationship with firm performance. This finding is consistent with the literature on successful re-engineering. This paper contributes to research by identifying the success factors of BPR implementation, and provides managerial insights on the successful management of BPR, in the banking industry. Copyright © 2008 John Wiley & Sons, Ltd. [source] Analysis of corporate social responsibility in the service sector: does exist a strategic path?KNOWLEDGE AND PROCESS MANAGEMENT: THE JOURNAL OF CORPORATE TRANSFORMATION, Issue 2 2008Armando Calabrese This paper proposes a strategic path managers might follow in order to optimise the outcome of the implementation of Corporate Social Responsibility (CSR) activities. As a starting point, we analysed the practice of CSR and its impact within a service industry, namely the Italian banking sector. Our aim was to understand the impact of CSR on the service company both externally and within the company itself and consequently our research was conducted on two different levels. The corporate level considers CSR as it is perceived by top management, and the operational level takes into account the perspectives of the front line employees and customers. Analysis at the corporate level was carried out by means of a thorough examination of the social reports and Internet sites of the service companies concerned, whereas the front line was studied by administrating a structured questionnaire, issued both to employees and to customers in a sample of bank branches. The research demonstrates that service companies are in fact implementing CSR initiatives and that stakeholders have a considerable interest in such initiatives. However, should the CSR initiatives be used as a tool solely to improve the brand equity rather than to improve relationships with their main stakeholders (employees and customers), then a boomerang effect is produced whereby the stakeholders pinpoint the CSR initiatives as one of the main reasons for their discontent with the service company. Although top managers invest in CSR initiatives in order to increase the satisfaction of the stakeholders, should the main stakeholders be unsatisfied with the management of the service company core business, the CSR initiatives might be rendered rather ineffective. As a result, the CSR initiatives may be a sign of underlying rift between top managers and the front line employees within the company, which in turn might also damage the relationship between bank and its customers. The implications of the findings in this paper provide a managerial tool for use in the implementation of CSR. This tool dictates a specific path to be followed which also requires precise timing for its success. Copyright © 2008 John Wiley & Sons, Ltd. [source] The entry and exit decisions of foreign banks in Hong KongMANAGERIAL AND DECISION ECONOMICS, Issue 6 2008Man K. Leung This paper presents a theoretical framework for explaining the entry and exit decisions of a firm, motivated by the differential returns in its home and a host market. Within this framework, the factors underpinning the entry and exit decisions of foreign banks in Hong Kong are examined, using a duration (accelerated failure time) model. It can be seen that a foreign bank, with international experience from having more overseas markets will take a shorter (longer) time to enter (exit) the Hong Kong market. Faster (slower) growth both in home trade with Hong Kong and in the Hong Kong banking sector itself will increase the likelihood of entry (exit). Ceteris paribus, Asian banks enter at a faster rate and survive longer in the Hong Kong market. Copyright © 2008 John Wiley & Sons, Ltd. [source] Continuous-time stochastic modelling of capital adequacy ratios for banksAPPLIED STOCHASTIC MODELS IN BUSINESS AND INDUSTRY, Issue 1 2006Casper H. Fouche Abstract Regulation related to capital requirements is an important issue in the banking sector. In this regard, one of the indices used to measure how susceptible a bank is to failure, is the capital adequacy ratio (CAR). We consider two types of such ratios, viz. non-risk-based (NRBCARs) and risk-based (RBCARs) CARs. According to the US Federal Deposit Insurance Corporation (FDIC), we can further categorize NRBCARs into leverage and equity capital ratios and RBCARs into Basel II and Tier 1 ratios. In general, these indices are calculated by dividing a measure of bank capital by an indicator of the level of bank risk. Our primary objective is to construct continuous-time stochastic models for the dynamics of each of the aforementioned ratios with the main achievement being the modelling of the Basel II capital adequacy ratio (Basel II CAR). This ratio is obtained by dividing the bank's eligible regulatory capital (ERC) by its risk-weighted assets (RWAs) from credit, market and operational risk. Mainly, our discussions conform to the qualitative and quantitative standards prescribed by the Basel II Capital Accord. Also, we find that our models are consistent with data from FDIC-insured institutions. Finally, we demonstrate how our main results may be applied in the banking sector. Copyright © 2005 John Wiley & Sons, Ltd. [source] Cost Efficiency of the Banking Sector in Vietnam: A Bayesian Stochastic Frontier Approach with Regularity ConstraintsASIAN ECONOMIC JOURNAL, Issue 2 2010Ha Thu Vu C11; D24; G21 This paper investigates the cost efficiency of the Vietnamese banking industry. To obtain an appropriate estimate of cost efficiency, monotonicity and concavity constraints are incorporated in the estimation of the cost frontier using the Bayesian approach. Overall, the level of cost efficiency of Vietnam's banking sector is relatively high, around 87 percent. The findings reveal minor and insignificant differences in the cost efficiency of different groups of banks classified by ownership. Furthermore, throughout the estimation period, the industry faced a slight decrease in cost efficiency. This could be explained by increases in the costs of managing diverse activities, the enlargement of branch networks and the upgrading of the banking technology platform. [source] X-Efficiency and Productivity Change in Australian BankingAUSTRALIAN ECONOMIC PAPERS, Issue 2 2004Penny Neal This paper investigates X -efficiency and productivity change in Australian banking between 1995 and 1999 using Data Envelopment Analysis (DEA) and Malmquist productivity indexes. It differs from earlier studies by examining efficiency by bank type, and finds that regional banks are less efficient than other bank types. The study concludes that diseconomies of scale set in very early and hence are not a sufficient basis on which to allow mergers between large banks to proceed. Total factor productivity in the banking sector was found to have increased by an average annual 7.6 per cent between 1995 and 1999. All of the productivity increase was due to technological advance shifting out the frontier. The banking sector's performance was less efficient relative to the frontier in 1999 than it had been in 1995. [source] External Dependent Economy and Structural Real Estate Bubbles in ChinaCHINA AND WORLD ECONOMY, Issue 1 2008Lijian Sun E44; F32; F41; G11 Abstract This study explores the relationship between external dependent economic structure, surplus monetary liquidity and real estate bubbles in China. Employing monthly data from 28 Chinese provinces over the period 2004-2005, we test whether real estate bubbles are caused by structural surplus monetary liquidity, controlling other possible factors. Our empirical findings show that the growth of private savings in the banking sector, as an index of surplus monetary liquidity, ferments real estate bubbles regardless of the different development level across the 28 provinces. [source] Competition Among Banks, Capital Requirements and International SpilloversECONOMIC NOTES, Issue 3 2001Viral V. Acharya The design of prudential bank capital requirements interacts with the industrial organization of the banking sector, in particular, with the level of competition among banks. Increased competition leads to excessive risk-taking by banks which may have to be counteracted by tighter capital requirements. When capital requirements are internationally uniform but the levels of competition among banks in different countries are not, international spillovers arise on financial integration of these countries. This result begs a more careful analysis of the effect of financial liberalization on the stability of banking sectors in emerging countries. It also calls into question the merits of employing uniform capital requirements across countries that diverge in the industrial organization of their banking sectors. (J.E.L.: G21, G28, G38, F36, E58, D62) [source] Contagion in banking due to BCCI's failure: evidence from national equity indicesINTERNATIONAL JOURNAL OF FINANCE & ECONOMICS, Issue 3 2004Angelos Kanas Abstract We examine whether the failure of the multinational banking group BCCI caused contagion effects in the banking sectors of four countries where BCCI had established operations, namely the UK, the US, Spain and Switzerland. We find evidence of contagion effects in the UK and Spain which appear to have registered several months before the eventual closure announcement. There is no evidence of contagion effects in the US and Switzerland. Our results have implications for the stability of the European banking sector, as banks licensed anywhere in the EU will be able to set up branches in other EU countries without needing to obtain further authorization. Copyright © 2004 John Wiley & Sons, Ltd. [source] The impact of the Asian financial crisis on bank efficiency: The 1997 experience of Malaysia and ThailandJOURNAL OF INTERNATIONAL DEVELOPMENT, Issue 7 2010Fadzlan Sufian Abstract In the mid-1990s, the East Asian countries experienced severe financial crisis that were followed by deep economic downturns. A variety of methodologies have been used to understand the nature of the Asian financial crisis. However, the impact of the 1997 Asian financial crisis on the efficiency of the financial industry has yet to be studied. By employing the Data Envelopment Analysis (DEA) approach the present study attempts to examine for the first time the impact of the 1997 Asian financial crisis on the efficiency of the Malaysian and Thailand banking sectors, two of the East Asian countries that were severely affected by the crisis. The study focuses on three major approaches vis., intermediation, value added and operating approaches. The results clearly bring forth the high degree of inefficiency in the Malaysian and Thailand banking sectors, particularly a year after the crisis. We find that the Malaysian banking sector has exhibited a higher TE levels during the post crisis period under the intermediation and value added approaches, while TE seems to be lower under the operating approach. The empirical findings suggest that the Thailand banking sector has exhibited a lower TE level during the post crisis period under all approaches. Copyright © 2009 John Wiley & Sons, Ltd. [source] | ||||||||||||||||||||||